MP63 FUND INC, 497, 2000-04-07

MP63 FUND INC
497, 2000-04-07

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THE MP 63 FUND, INC.

The MP 63 Fund, Inc. seeks long term capital appreciation. The Fund
will accumulate shares on a regular basis in a diverse group of companies that
meet the criteria established by Moneypaper Advisor, Inc. (the "Adviser") for
long term capital appreciation (see Investment Objectives). The Fund seeks to
minimize investment risk by accumulating shares on a regular basis in the
companies whose securities are purchased and held by the Fund.

This Prospectus, dated March 6, 2000, describes the information about
the Fund that you should have before investing. Please read it carefully before
investing and retain it for future reference.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

RISK/RETURN SUMMARY

INVESTMENT RISKS AND PERFORMANCE

Investment Objective

Principal Investment Strategy

The Fund seeks to achieve its investment objective by investing at
least 65% of its total assets in common stock of companies that comprise the
Moneypaper 63 Stock Index, typically large capitalization stocks, with an
emphasis on quality and diversity. The Moneypaper 63 Stock Index is diversified
across industries and is equally weighted among companies that offer dividend
reinvestment plans, regardless of the relative size of the companies. Generally,
each company is allocated an equal amount of the total to be invested. The Fund
seeks to minimize investment risk by accumulating shares on a regular basis in
the companies whose securities are purchased and held by the Fund.

Principal Risks of Investing in the Fund

All investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions, and
other factors. The Fund's total return, like stock prices generally, will
fluctuate within a wide range, so an investor could lose money over short or
long periods of time. The fund is also subject to investment style risk, which
is the chance that returns from large capitalization dividend paying stocks will
trail returns from other stock categories, the overall stock market, or other
investments. Over the past five and ten year period, large cap stocks have
outperformed the market in general and a similar period of under- performance is
possible. In addition, investors should be aware that the Fund has a limited
operating history and that the Adviser has limited experience in acting as an
investment adviser to a mutual fund.

RISK/RETURN TABLE

The table below compares the performance of the MP 63 Fund to the S&P
500(R) Index, a commonly accepted broad measure of stock market performance. By
doing so, the table gives some indication of the risk of the investment in the
Fund. Past performance does not necessarily indicate how the Fund will perform
in the future.

The returns in the following table take into account the effect of fee
waivers and expense reimbursements by the Advisor. If the fee waivers and
expense reimbursement had not been in effect, the Fund's return would be lower
than that show.

TOTAL RETURN (for the period ended December 31, 1999)
- --------------------------------------------------------------------------------

MP 63Fund* 0.80%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

S&P 500(R)Index ** 24.73%
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* The Fund commenced operations on March 1, 1999.
** The S&P 500(R) Index is an unmanaged index. Index returns assume
reinvestment of dividends unlike the Fund's return, however, they do not
reflect any fees or expenses.

The return of the MP 63 Fund for the period ended December 31, 1999 was 0.80%.
During calendar year 1999, the Fund's highest return for a quarter was 6.33%
(quarter ended 6/30/99) and the lowest return for a quarter was (10.02%)
(quarter ended 9/30/99).

Since the Fund was launched on March 1, 1999, the Fund is not yet in a
position to provide a bar chart showing a history of performance or a table of
one, five and ten year return.

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TRANSACTION AND OPERATING EXPENSE TABLE

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER TRANSACTION FEES (paid directly from your investment)(1)
Maximum Sales Fee (Load) Imposed on Purchases (as a percentage
of the offering price) None
Maximum Redemption Fee(2) 2%
Exchange Fees None
Account Maintenance Fee (for accounts under $2,000) $10/year

ESTIMATED ANNUAL FUND OPERATING EXPENSES (expenses that are
deducted from fund assets, expressed as a
percentage of net assets)
Management Fees 0.35%
Maximum Administration Fees3
0.35%
Distribution (and/or Service) (12b-1) Fees None
Other Expenses(4, 5)
0.55%
Total Estimated Fund Operating Expenses(5) 1.25%

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1 Shareholder accounts that are opened with less than $2,000 or that
have an average annual account balance of less than $2,000 as of the end of each
calendar year will be charged an account maintenance fee of $10.00 per account,
which will be paid to the Administrator. Additionally, financial institutions
selling Fund shares may charge investors a fee for their services.

2 Shares held less than three years are subject to a 2% Redemption
Fee. Shares held less than five years but more than three years will be charged
a 1% Redemption Fee. Redemption Fees do not apply to IRAs and other tax-deferred
accounts. For an explanation of Redemption Fees, see How to Redeem Shares,
below.

3 The Adviser and the Administrator each receive annual fees equal to
0.35% of the Fund's average daily net assets. The Adviser, from time to time,
may, in its discretion, waive some or all of its advisory fees. The Adviser paid
all expenses incurred to organize the Fund and will be responsible for the costs
associated with the management of the Fund. See, Management, below, for further
information about the Adviser.

4 Included among Other Expenses are state registration and custody
fees.

5 Other Expenses and Total Estimated Fund Operating Expenses are
based on estimated amounts assuming net assets of $10 million in the Fund.

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Example:

You would pay the following expenses on a $10,000 investment, assuming a 5%
annual return and redemption at the end of each time period:

1 year $338.67
3 years $637.66

THE PURPOSE OF THE ABOVE TABLE IS TO HELP YOU UNDERSTAND THE VARIOUS COSTS AND
EXPENSES THAT YOU, AS A SHAREHOLDER, WILL BEAR DIRECTLY OR INDIRECTLY IN
CONNECTION WITH AN INVESTMENT IN THE FUND. THE EXAMPLE SET FORTH ABOVE ASSUMES
REINVESTMENT OF ALL DIVIDENDS AND USES A 5% ANNUAL RATE OF RETURN AS REQUIRED BY
SEC REGULATIONS.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE CONSIDERED
INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS AND EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN.

The Fund pays certain operating expenses directly,
including, but not limited to, custodial, auditing, and legal
fees; fees of the independent directors; costs of printing and mailing
prospectuses, statements of additional information, proxy statements, notices,
and reports to shareholders; insurance expenses; and costs of registering its
shares for sale under federal and state securities laws. See the SAI for a more
detailed discussion of independent director compensation.

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

The Fund seeks to provide investors with long-term capital
appreciation through the accumulation of shares of common
stock. The Adviser will make no effort to time the market and its investment
decisions, will not be influenced by movement in the stock market in general,
and will not respond to the day-to-day ups and downs of the business activities
of the companies it holds. The Adviser identifies companies based primarily on
the Moneypaper 63 Stock Index (MP 63 Index), which is comprised of common stocks
of companies that encourage shareholders to participate in their dividend
reinvestment plans. The Fund will continue to acquire and hold such common
stocks, provided the companies continue to meet the Fund's and the Adviser's
investment criteria outlined below.

Unlike many other equity mutual funds, the Fund does not
view a drop in the value of the shares held by the Fund as a negative
occurrence. When the market price of its holdings is relatively low, it will be
able to buy more shares than it would if the price were higher. Because the Fund
expects to accumulate shares in the same companies over a period of years, drops
in the market prices of any of its holdings give the Fund the ability to buy
shares at favorable prices.

Investors are encouraged to add to their Fund positions
regularly as a means of accumulating assets slowly over the long-term. Investors
redeeming their shares in less than five years will be subject to a redemption
fee. See How to Redeem Shares, below. It is anticipated that over any ten-year
period the Fund will have accumulated more shares at lower prices than it
accumulated at higher prices, thus the long-term investor in the Fund has
increased the likelihood of achieving the investment objective and has reduced
the risk of negative results.

<PAGE>

The Fund is not intended to be a complete investment
program. There is no assurance that the Fund will achieve its investment
objective. The Fund's investment objective may not be changed without
shareholder approval. However, specific investment policies employed by the
Adviser to achieve the Fund's objective may be changed or eliminated by the
Fund's Board of Directors without shareholder approval. The Fund has also
adopted investment restrictions, most of which may not be changed without
shareholder approval. See "Investment Objective, Policies and Restrictions" in
the SAI.

INVESTMENT POLICIES

The Fund seeks to achieve its investment objective by
investing in a diversified portfolio of common stocks of companies, each of
which offers a dividend reinvestment plan. The Fund will have a wide
representation among industries. The Fund will invest at least 65% of its total
assets in the common stocks of the 63 companies that comprise the Moneypaper 63
Stock Index. The Fund's portfolio companies will also satisfy certain other
favorable investment characteristics, including growth in earnings, continuous
history of paying dividends, low debt ratios and prospects for future growth.

The Adviser continually monitors the Fund's portfolio to
ensure that the companies comprising the portfolio continue to meet the
investment criteria. The Adviser's disciplined investment approach differs from
certain more "actively managed" equity funds because the Adviser is not buying
or selling shares of portfolio companies based on swings in economic or market
conditions. The Fund, however, should not be confused with, and is not intended
to be, an index fund. The Fund will follow closely the stock selections in the
Moneypaper's MP 63 Stock Index. See MP 63 Stock Index, below, for a description
of such Index; however, the Adviser reserves the right to make independent
investment management decisions regarding the composition of the Fund's
portfolio. For example, a portfolio company may cease to be listed on the MP 63
Stock Index but continue to be held by the Fund if the Adviser believes that the
company meets its criteria for investment or if it would be disadvantageous to
the Fund and its shareholders to sell such stock at such time. This
determination may also affect the weightings of stocks or the industries in
which the Fund invests as compared with similar weightings in the Index during
such time.

The Fund expects to receive cash on an ongoing basis and
will be making regular investments in the companies it already holds. Initial
investments were made by the Fund in proportion to the then current holdings of
the MP 63 Stock Index. On a regular basis, cash is invested to the extent
possible evenly among the 63 companies that make up the MP 63 Stock Index. This
process results in a strategy similar to that of dollar-cost averaging. By
utilizing this strategy when investing additional funds for its shareholders and
by minimizing portfolio turnover, the Adviser believes that the Fund will
maximize accumulation, thereby compounding its value. Dividends will be
reinvested in the companies that paid them.

The Adviser believes that the combination of its strategy
to invest equal dollar amounts in each company, together with a secondary
investment strategy it calls "INVEST%," will better enable the Fund to achieve
its investment objective. INVEST% is a proprietary investment strategy that
relies on the relationship of a stock's market price to its 52-week high or
52-week low. The Adviser uses INVEST% to determine whether to invest more or
less than the predetermined investment amount in a particular stock. In general,
the predetermined investment amount represents the uninvested cash balance
divided equally among all of the current portfolio companies. However, at the
end of each calendar quarter, the Adviser will invest any remaining uninvested
cash balance. The use of INVEST% will only defer or accelerate purchasing. Each
company is allocated an equal amount of the total to be invested. The Advisor
rounds up the number, or rounds down the number of shares based on the
percentage results of INVEST%. The difference between the allocation and the
amount we actually purchased is carried over to the next investment, but remains
allocated to that company in particular.

<PAGE>

MP 63 STOCK INDEX

The MP 63 Stock Index was created by the editors of The
Moneypaper, (a monthly investment newsletter) at the start
of 1994 in order to track a representative sampling of companies that offer
dividend reinvestment plans ("DRPs"). With an emphasis on quality and diversity,
the Index contains companies that can easily serve as "core" holdings in any
portfolio, and typify the long-term aims of the small investor who uses DRPs to
build wealth. The result is a mixture of industrial companies, utilities, and
transportation firms and runs the gamut from pharmaceuticals to retailers.
Included are blue chip companies, banks, food companies and other companies that
should do well over the long-term.

The MP 63 Index is equally weighted among companies,
regardless of their size, and basically follows the fate of $100 investments in
each company, with dividends reinvested, individually and in the aggregate. Each
company has its own "index", regardless of price level or stock split history,
and the overall index is the aggregate performance of all stocks. When an
individual company has a reading of 200, it has doubled the value of its initial
investment, which was made at the start of 1994, turning $100 into $200. When
the MP 63 passed the 200 level, as it did on June 6, 1997, it meant that an
initial investment of $6,300 ($100 in each company) had achieved a value of over
$12,600.

The MP 63 Index is designed to demonstrate and encourage
individual investors to achieve long-term wealth by investing in a diverse group
of companies, which decreases risk, and to focus on high-quality,
investor-friendly firms that offer DRPs. By and large, the companies included
require ownership of just one share to enroll in their dividend reinvestment
plan. In addition, these companies either do not charge any fees or, in some
cases, charge minimal fees for participating in such plans. Although the Fund
may not exactly mirror the holdings of the MP 63 Stock Index, its investing
philosophy, as described above, is inspired by it.

Companies are replaced in the MP 63 Fund in conjunction
with changes made to the underlying MP 63 Index. The MP 63 Index is diversified
across industries. Replacements are generally made only when a company adopts a
high-fee dividend reinvestment plan (DRP) or when a component is merged into or
acquired by another company which is a non-DRP company, a replacement is chosen;
but if the acquirer is judged to be a suitable replacement, it may take the
place of the company being acquired and the shares are converted without capital
gains realization.

RISK CONSIDERATIONS

All investment securities are subject to inherent market
risks and fluctuations in value due to earnings, economic and political
conditions, and other factors. The Fund's total return, like stock prices
generally, will fluctuate within a wide range, so an investor could lose money
over short or long periods of time. The fund is also subject to investment style
risk, which is the chance that returns from large capitalization dividend paying
stocks will trail returns from other stock categories, the overall stock market,
or other investments. Over the past five and ten year period, large cap stocks
have outperformed the market in general and a similar period of
under-performance is possible. In addition, investors should be aware that the
Fund has a limited operating history and that the Adviser has limited experience
in acting as an investment adviser to a mutual fund.

PORTFOLIO TURNOVER

Portfolio turnover generally involves some expense,
including brokerage commissions or dealer markups and other transaction costs on
the sale of securities and investment in other securities. As a result of the
Fund's investment policies, the Adviser believes that its portfolio turnover
rate will be lower than that of most other equity mutual funds. In general, the
Fund's portfolio turnover rate is expected to be less than 10%. A low portfolio
turnover rate reduces the number of transactions that may also result in the
realization of taxable capital gains, some or all of which may be short-term
capital gains not eligible for favored tax treatment.

<PAGE>

DIVERSIFICATION

The Fund is a "diversified" investment company under the
Investment Company Act of 1940. This means that with respect to 75% of its total
assets, (a) the Fund may not invest more than 5% of its total assets in the
securities of any one issuer (except U.S. Government securities) and (b) the
Fund may not own more than 10% of the outstanding voting securities of any one
issuer. The remaining 25% of its total assets is not subject to this
restriction. To the extent that the Fund invests a significant portion of its
assets in the securities of a particular issuer, it will be subject to an
increased risk of loss if the market value of such issuer's securities declines.

The Fund was launched during a period of historically high
prices for the large-capitalization stocks that comprise the universe of DRP
companies. In its early states, capital was invested on a weekly or bi-weekly
basis, so as to spread the pricing risk over the phase-in period, which lasted
several months. During that time, the NAV fluctuated between $9.37 and $10.70
per share, with the Fund's assets reaching $12 million by the end of August,
1999. We made the 23rd purchase for the Fund on November 10, with the Fund's NAV
at $9.93 (and the Dow Industrials at about 10,600). A week later, the NAV closed
at $10.18 (and the Dow above 10,900).

MANAGEMENT

BOARD OF DIRECTORS

The Fund's Board of Directors has the primary
responsibility for overseeing the overall management of the Fund and electing
its officers. The Fund's Board of Directors is composed of the following six
persons: Ted S. Gladstone, President, Gladstone Development Corporation; Gloria
L. Schaffer, retired since 1996; prior thereto from 1991-1995, Commissioner of
Consumer Protection for the State of Connecticut; Harold G. Weinreb, Consultant
since 1987; prior thereto from 1966 to 1987, employed by W.R. Grace & Co.;
Angela Shashoua, commercial real estate developer in Boston, Massachusetts since
1975; Vita Nelson, Chief Executive Officer of The Moneypaper, Inc.; and Michael
Miola, Chief Executive Officer of American Data Services, Inc.

INVESTMENT ADVISER

The Moneypaper Advisor, Inc. (the "Adviser"), 1010
Mamaroneck Avenue, Mamaroneck, New York 10543, has been retained under an
Investment Advisory Agreement with the Fund to act as the Fund's investment
adviser subject to the authority of the Board of Directors. Vita Nelson, David
Fish and Rod Drysdale will be responsible for the overall management of the
Fund's portfolio.

Ms. Nelson's first job in the financial industry was as a
bond trader at Granger & Co., in New York, where she made a market in municipal
bonds. She is the Chief Executive Officer of The Moneypaper, Inc., and the
Editor and Publisher of four well-respected financial publications. Ms. Nelson
has, among her achievements, popularized the use of dividend reinvestment plans
(DRPs). These plans accept investments from individuals directly (thereby
permitting the individual to bypass brokers).

The Moneypaper's Guide to Dividend Reinvestment Plans is
the acknowledged authority on the operations of company-sponsored direct
investment plans. The Guide provides eligibility criteria and plan features of
more than 1,100 companies that accept direct investments. In addition, Ms.
Nelson is the Editor and Publisher of The DRP Authority, Direct Investing, as
well as The Moneypaper, which began publishing in 1981 as a monthly guide for
the self-reliant investor. Mrs. Nelson graduated from Boston University with a
degree in Comparative Literature.

Mr. Fish is the Executive Editor of three publications of
The Moneypaper, Inc.: The Moneypaper, Direct Investing, and the DRP Authority.
He is responsible for the daily management of the MP 63 Stock Index and his
responsibilities at The Moneypaper Inc. include research, editing, and revising
the Moneypaper's Guide to Dividend Reinvestment Plans. Prior to joining The
Moneypaper, Inc. in 1994, Mr. Fish was a Senior Accountant with Thom McAn Shoe
Company since 1974. Mr. Fish graduated magna cum laude with a B.S. degree in
Business Administration from Worcester State College, Worcester, MA (1974).

<PAGE>

Mr. Drysdale is the Chief Financial Officer of Temper of
the Times Communications, Inc., a registered broker-dealer, an affiliate of the
Adviser. From 1989 through 1998, Mr. Drysdale was employed by Citibank, N.A. in
both its retail banking and brokerage services division. He earned a B.S. degree
in Finance from the University of Vermont in 1989.

The Adviser furnishes the Fund with investment advice and
supervises the Fund's management and investment programs. The Adviser furnishes
at its own expense all necessary administrative services, office space,
equipment and clerical personnel for servicing the investments of the Fund. The
Adviser also provides investment advisory facilities and executive and
supervisory personnel for managing the investments and effecting the portfolio
transactions of the Fund. In addition, the Adviser pays the salaries and fees of
all officers of the Fund who are affiliated with the Adviser.

Under the Investment Advisory Agreement, the Fund pays the
Adviser a monthly advisory fee equal, on an annual basis, to 0.35% of its
average daily net assets. The Adviser may, from time to time, voluntarily waive
a portion of its fees.

CODE OF ETHICS

The Fund and the Adviser have adopted a Code of Ethics that
restricts personal investing practices by employees of the Adviser and its
affiliates. Among other provisions, the Code of Ethics requires that employees
with access to information about the purchase or sale of securities in the
Fund's portfolio obtain preclearance before executing personal trades. With
respect to Ms. Nelson and other investment personnel, the Code of Ethics
prohibits acquisition of securities in an initial public offering, as well as
profits derived from the purchase and sale of the same security within 60
calendar days. These provisions are designed to ensure that the interests of the
Fund and its shareholders come before the interests of the people who manage the
Fund.

PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

Portfolio transactions for the Fund will generally be
executed with broker-dealers on an agency basis. The Adviser will be responsible
for placing all orders for purchases and sales of the Fund's securities. In
selecting broker-dealers, the Adviser may consider research and brokerage
services furnished to the Fund as well as to the Adviser and its affiliates.
Subject to seeking the most favorable price and execution available, the Adviser
may consider sales of shares of the Fund's shares (and of those of future series
of the Fund) as a factor in the selection of broker-dealers. In addition, any
portfolio transactions for the Fund that are executed on an agency basis may be
effected through an affiliate of the Adviser. For more information, see
"Portfolio Transactions and Allocation of Brokerage" in the SAI.

FUND ADMINISTRATOR

The Fund's Administrator is American Data Services, Inc.
("ADS" or the "Administrator"), which has its principal office at The Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, NY 11788, and is primarily in
the business of providing administrative, fund accounting, and stock transfer
services to retail and institutional mutual funds with approximately $6 billion
in total assets through its offices in New York, Denver, Tampa, and Los Angeles.
Pursuant to an Administrative Service Agreement with the Fund, the Administrator
provides all administrative, transfer agency, and fund accounting services
necessary for the Fund, subject to the supervision of the Board of Directors.

<PAGE>

For the services rendered to the Fund by the Administrator,
the Fund pays the Administrator a monthly fee, which is based on its average net
assets. If the Fund's average daily net assets are: less than $75 million, the
Administrator's fee is equal to 0.35% on an annual basis of its average daily
net assets; between $75 million and $200 million, the Administrator's fee is
equal to 0.30% of such assets; between $200 million and $500 million, the
Administrator's fee is equal to 0.25% of such assets; between $500 million and
$1 billion, the Administrator's fee is equal to 0.20% of such assets; and in
excess of $1 billion, the Administrator receives a fee equal to 0.10% of the
Fund's average daily net assets. The Fund also reimburses the Administrator for
printing, postage, and telephone costs.

TERMINATION

Both the Investment Advisory Agreement and the
Administrative Service Agreement are terminable by the Board of Directors of the
Fund, the Adviser, or the Administrator, on sixty (60) days' written notice. The
Investment Advisory Agreement will terminate automatically in the event of its
"assignment" as defined in the Investment Company Act. The Administrative
Service Agreement, however, may be assigned provided the nonassigning party has
given prior written consent. Each Agreement shall remain in effect for two years
from the date of its initial approval, and subject to annual approval of the
Board of Directors for one-year periods thereafter. Each Agreement provides that
in the absence of willful misfeasance, bad faith, gross negligence on the part
of the Adviser or willful misuse, bad faith or negligence on the part of the
Administrator, or reckless disregard of its obligations thereunder, the Adviser
or the Administrator shall not be liable for any action or failure to act in
accordance with its duties thereunder.

DISTRIBUTOR

ADS Distributors, Inc. ("the Distributor"), an affiliate of
the Administrator, has entered into a distribution agreement with the Fund to
serve as distributor for the Fund's shares. There is no fee paid to the
Distributor for serving in this capacity.

The Adviser and/or the Administrator may, out of its own
assets, pay for certain expenses incurred in connection with the distribution of
Fund shares. In particular, either or both entities may make payments out of its
own assets to sales representatives and broker-dealers in connection with sales
of Fund shares. See, How to Purchase Shares-Purchase Price, below.

HOW TO PURCHASE SHARES

GENERAL PURCHASE INFORMATION

The minimum initial investment in the Fund is $1,000. The
Fund may waive or reduce the minimum for certain retirement and employee savings
plans or custodial accounts for the benefit of minors. The Fund's shares may be
purchased at their net asset value from the Distributor, from other
broker-dealers that are members of the NASD, and from certain financial
institutions that have entered into selling agreements with the Distributor.

When orders are placed for shares of the Fund, the public
offering price used for the purchase will be the net asset value per share next
determined. The Fund's net asset value is determined at 4:15 on each business
day. If an order is placed with a broker-dealer, or other financial institution,
the broker-dealer or other financial institution is responsible for promptly
transmitting the order to the Fund's Transfer Agent/Administrator.

Shares of the Fund may be purchased by opening an account
either by mail, by phone or, to the extent available and permitted by applicable
law, by use of the Internet. Shares are deemed to be purchased as of the time of

<PAGE>

determination of the Fund's net asset value on the day the purchase order for
the purchase of its shares is received in good form by the Fund or the
Administrator. Investors may make systematic investments of fixed amounts
automatically on a monthly or quarterly basis through the Fund's Automatic
Investment Plan. The Adviser believes shareholders should use this Plan for
budgetary purposes and not for the purpose of investing according to an
investor's individual dollar-cost averaging strategy and the Adviser suggests
that investments be made quarterly, not monthly. Additional information is
available from the Fund's Transfer Agent/Administrator.

PURCHASES BY TELEPHONE

To open an account by telephone, you must first call
1-877-MP63FUN (676-3386) to obtain an account number and instructions.
Information concerning the account will be taken over the phone. Subject to
acceptance by the Administrator, shares of the Fund may be purchased by wiring
immediately available federal funds (subject to the minimum investment) to
Firstar Corp. from your bank, which may charge a fee for doing so (see
instructions below). You should provide your bank with the following information
for the purpose of wiring your investment:

Firstar Corp. Cinti/Trust
ABA# 0420-0001-3
Account # 488-922-956__F/B/O MP 63 Fund
Shareholder Acct. No.______________________________
(write in Account Number)
Shareholder Acct. Name______________________________
(write in Shareholder Name)

You must mail a signed application to the Fund's Transfer
Agent/Administrator at the address listed below in order to complete your
initial wire purchase. Wire orders will be accepted only on a day on which the
Fund, the Custodian and the Transfer Agent are open for business. A wire
purchase will not be considered completed until the wired money is received by
the Fund's custodian bank. Any delays in wiring money, including delays that may
occur in processing by the banks, are not the responsibility of the Fund or the
Transfer Agent/ Administrator. At present, there is no fee for the receipt of
wired funds, but the Fund reserves the right to charge shareholders for this
service.

PURCHASES BY MAIL

Subject to acceptance by the Fund's Administrator, an
account may be opened by completing and signing an account application and
mailing it, together with a check (subject to the Fund's minimum investment of
$1,000) payable to:

MP 63 Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132

Payment received by mail for the purchase of shares will be
credited to a shareholder's account at the net asset value per share next
determined after receipt. In the event that there are insufficient funds to
cover a check, the shareholder or prospective investor will be assessed a $15.00
charge.

ADDITIONAL INVESTMENTS

Additional investments may be made at any time (subject to
the minimum subsequent investment of $100; $50 for purchases made using the
Fund's Automatic Investment Plan) by purchasing shares of the Fund at net asset
value. This may be done by mailing a check to the Fund at the address noted
under "Purchases by Mail" or by wiring monies to the custodian bank, as outlined
above, from a bank or financial institution, with which the shareholder has an
account and which is a member of the Federal Reserve System, with instructions
to transmit federal funds by wire to the Fund.

<PAGE>

OTHER PURCHASE INFORMATION

Investors should be aware that the Fund's account
application contains provisions that exclude the Transfer Agent, the
Distributor, and certain of the Distributor's affiliates from certain
liabilities (including, among others, losses resulting from unauthorized
shareholder transactions) relating to the various services (for example,
telephone exchanges) made available to investors.

The Fund must receive an order and payment by the close of
business for the purchase to be effective. If funds are received after the close
of business (4:00 p.m.), the purchase will become effective on the next business
day.

All purchases of the Fund's shares will be made in full and
fractional shares calculated to three decimal places. The Fund will not issue
stock certificates evidencing ownership of Fund shares.

HOW TO REDEEM SHARES

GENERAL REDEMPTION INFORMATION

You may redeem all or a portion of your shares on any day
that the Fund values its shares (please refer to "Valuation of Shares" below for
more information). Your shares will be redeemed at the net asset value next
determined after receipt of your instructions in good form as explained below.
The Fund's net asset value will fluctuate on a daily basis. The value of shares
redeemed may be more or less than the purchase price, depending on the market
value of the investment securities held by the Fund.

If authorized in the account application, you may contact
the Transfer Agent by telephone with an oral request or send a written request.
This request should contain: the dollar amount or number of shares to be
redeemed, your Fund account number, and either a Social Security or tax
identification number (as applicable). You should sign your request in exactly
the same way the account is registered. If there is more than one owner of the
shares, all owners must sign.

SIGNATURE GUARANTEES

No signature guarantee is required for redemptions in an
amount less than $2,500 or when the redemption amount is to be sent to a
shareholder directly. To protect shareholder accounts, the Fund, and its
Transfer Agent from fraud, signature guarantees are required to enable the Fund
to verify the identity of the person who has authorized a redemption from an
account when (1) the proceeds are to be sent to someone other than to the
registered shareholder(s) at the registered address, and/or (2) shares are
requested to be transferred to another individual or entity other than the
shareholder. Signature guarantees may be obtained from certain eligible
financial institutions, including, but not limited to, the following: banks,
trust companies, credit unions, securities brokers and dealers, savings and loan
associations, and participants in the Securities Transfer Association Medallion
Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP"), or the New
York Stock Exchange Medallion Signature Program ("MSP"). Shareholders may
contact the Fund at (1-877-MP63FUN (676-3386) for further details.

BY MAIL

The Fund will redeem its shares at the net asset value next
determined after the request is received in "good order." The net asset value
per share of the Fund is determined as of 4:15 p.m., New York time, on each day

<PAGE>

that the New York Stock Exchange, Inc. (the "NYSE"), the Fund, and the Transfer
Agent/Administrator are open for business. Requests should be addressed to: MP
63 Fund, c/o American Data Services, Inc., P.O. Box 5536, Hauppauge, NY
11788-0132. Requests in "good order" must include the following documentation:

(a) a letter or standard form of instruction
specifying the number of shares or dollar amount
to be redeemed, signed by all registered owners
of the shares in the exact names in which they
are registered;

(b) any required signature guarantees (see Signature Guarantees,
above); and

(c) other supporting legal documents, if required, in
the case of estates, trusts, guardianships,
custodianships, corporations, pension and
profit-sharing plans, and other organizations.

BY TELEPHONE

Provided the Telephone Redemption Option has been
authorized in the application, a redemption of shares may be requested by
calling the Fund's Transfer Agent at 1-877-MP63FUN (676-3386) and requesting
that the redemption proceeds be mailed to the primary registration address or
wired per the authorized instructions. If the Telephone Redemption Option is
authorized, the Fund and its Transfer Agent may act on telephone instructions
from any person representing himself or herself to be a shareholder and believed
by the Fund or its Transfer Agent to be genuine.

The Transfer Agent's records of such telephone instructions
are binding and each shareholder, and not the Fund or its Transfer Agent, bears
the risk of loss in the event of unauthorized instructions reasonably believed
by the Fund or its Transfer Agent to be genuine. The Fund will employ reasonable
procedures to confirm that instructions communicated are genuine and, if it does
not, it may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures employed by the Fund in connection with
transactions initiated by telephone may include tape recording of telephone
instructions and requiring some form of personal identification information
prior to acting upon instructions received by telephone.

PAYMENT OF REDEMPTION PROCEEDS

After your shares have been redeemed, proceeds will be paid
within three business days. In no event will payment be made more than seven
days after receipt of your order in good form, except that payment may be
postponed or the right of redemption suspended for more than seven days under
unusual circumstances, such as when trading is not taking place on the NYSE.
Payment of redemption proceeds may also be delayed if the shares to be redeemed
were recently purchased by a check drawn on a bank that is not a member of the
Federal Reserve System, or until such check has cleared the banking system
(normally up to 15 days from the purchase date).

REDEMPTION FEE

The Fund is designed for long-term investors. It is not
designed for short-term traders whose frequent purchases and redemptions can
generate substantial cash flow. These cash flows can unnecessarily disrupt the
Fund's investment program. Short-term traders often redeem when the market is
most turbulent, thereby forcing the sale of underlying securities held by the
Fund at the worst possible time as far as long-term investors are concerned.
Additionally, short-term trading drives up the Fund's transaction costs measured
by both commissions and bid/ask spreads which are borne by the remaining
long-term investors. Moreover, short-term sales have tax consequences that would
be borne by the remaining shareholders. For these reasons, the Fund assesses a
2% fee on the redemption of shares held for less than three years. This fee is
reduced to 1% for shares held for more than three years but less than five years
and no fee is charged for shares held for more than five years. Redemption Fees
will be paid to the Fund to help offset transaction costs.

<PAGE>

The fee does not apply to any shares purchased through
reinvested distributions (dividends and capital gains) or to shares held in
retirement plans (such as 401(k), 403(b), 457, Keogh, profit-sharing plans, and
money purchase Pension Plans). This fee also does not apply to shares held in
IRA accounts.

To calculate Redemption Fees, the Fund will use the
first-in, first-out (FIFO) method to determine the holding period. Under this
method, the date of the redemption will be compared with the earliest purchase
date of shares held in the account. If this holding period is less than five
years, a redemption fee will be assessed. In determining the "five year" or
"three year" provision, the Fund will use the anniversary date of a transaction.
Thus, for example, shares purchased on January 1, 1999, will be subject to a 2%
fee if they are redeemed on or prior to December 31, 2001. Shares redeemed on or
after January 1, 2004, will not be subject to any redemption fee. In the event
of a partial redemption, shares will be redeemed on a first in/first out basis,
that is the earliest purchased shares will be deemed to be redeemed first.

INVOLUNTARY REDEMPTION

The Fund reserves the right to redeem your account at any
time the net asset value of the account falls below $500 as the result of a
redemption request. You will be notified in writing prior to any such redemption
and will be allowed 30 days in which to make additional investments before the
redemption is processed.

SHAREHOLDER SERVICES

The Fund offers several service options to make your
account easier to manage. These are listed on the account application. Please
make note of these options and elect the ones that are appropriate for you.

AUTOMATIC INVESTMENT PROGRAM

You can automatically transfer $50 or more per month from
your bank, savings and loan, or other financial institution to purchase
additional shares. The Adviser believes that the use of this program by
shareholders should be for budgetary purposes and not for the purpose of
investing through an investor's individual dollar-cost averaging strategy.
Contact the Transfer Agent/Administrator by calling 1-877-MP63FUN (676-3386) to
obtain authorization forms or for additional information.

TELEPHONE TRANSACTION PRIVILEGES

Shareholders purchasing shares directly from the Fund will
hold their shares with the Fund's Transfer Agent. You may authorize telephone
redemption transaction privileges by selecting that option on the application
form. It may be difficult to reach the Fund by telephone during periods when
market or economic conditions foster an unusually large volume of telephone
requests. Although the Adviser believes that this would not be an advantageous
time to redeem your shares, you may still elect to do so. If you cannot reach
the Fund by telephone, you should issue written instructions to the Transfer
Agent at P.O. Box 5536, Hauppauge, New York 11788-0132. The Fund reserves the
right to suspend or terminate its telephone services at any time without notice.

TAX-QUALIFIED RETIREMENT PLANS

The Fund is available for your tax-deferred retirement plan.

-- INDIVIDUAL RETIREMENT ACCOUNTS ("IRAs"): simple IRAs, Roth
IRAs, Education IRAs, or any other form of IRA permitted by
law;
-- 403(B) PLANS for employees of public school systems and
non-profit organizations;
-- 401(K) PLANS;
-- PROFIT-SHARING PLANS AND PENSION PLANS for corporations and
employees.

<PAGE>

You can also transfer your tax-deferred plan from another
fund or custodian. The shareholder bears the responsibility for any tax
obligations incurred, such as with respect to the conversion of a tax-deductible
IRA to a Roth IRA. An IRA disclosure document including a Request to Transfer
form can be obtained by calling the Fund at 1-877-676-3386.

CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION

The Transfer Agent/Administrator, on behalf of the Fund,
will send you confirmations of all of your purchases or redemptions of Fund
shares. If there is no activity in your Fund account, you will receive account
statements on a quarterly basis. In addition, you will receive various IRS forms
after the first of each year detailing important tax information, and the Fund
is required to supply annual and semi-annual reports that list securities held
by the Fund and include its then current financial statements.

DIVIDENDS AND DISTRIBUTIONS

The Fund will distribute its net investment income, if any,
and net realized capital gains, if any, annually. Distributions from capital
gains are made after applying any available capital losses and/or capital loss
carryovers.

Although the Fund's Adviser believes that accumulating
shares through the reinvestment of all dividends and capital gains distributions
contributes to the success of this investment strategy and suggests that
shareholders reinvest all distributions in additional Fund shares, by law the
Fund must allow you to choose from among the following three options:

-- Reinvest all distributions in additional shares;
-- Receive distributions from net investment income in cash while
reinvesting capital gains distributions, if any, in additional
shares; or
-- Receive all distributions in cash.

You can change your distribution option by notifying the
Fund in writing. If you do not select an option when you open your account, all
distributions will be reinvested in additional shares. You will receive a
statement confirming the reinvestment of distributions in additional shares
promptly following the end of each calendar year.

If a check representing a distribution is not cashed within
a specified period (generally three months), the Transfer Agent will notify you
that you have the option either of requesting another check or of reinvesting
the distribution in the Fund. If the Transfer Agent does not receive your
election, the distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or the Transfer Agent is returned as
"undeliverable," all Fund distributions will automatically be reinvested in the
Fund. Be sure to send the Transfer Agent notification of any change of address.

VALUATION OF SHARES

The Fund computes its net asset value (or price per share)
on each day the NYSE is open for business. The calculation is made as of the
regular close of the Exchange (currently 4:15 p.m., New York time).

Portfolio securities for which market quotations are
readily available are valued at market value. Portfolio securities for which
market quotations are not considered readily available are valued at fair value

<PAGE>

on the basis of valuations furnished by a pricing service approved by the Board
of Directors. The pricing service determines valuations for normal,
institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships between
securities that are generally recognized by institutional traders.

Short-term investments held by the Fund that mature in 60
days or less are valued at amortized cost, which approximates market value. All
other securities and assets are valued at their fair value following procedures
approved by the Board of Directors.

TAX STATUS

Distributions of income by the Fund are generally taxable
to shareholders as ordinary income. Certain Fund distributions may be considered
as short- or long-term capital gain. Capital gains may be taxable at different
rates depending upon the length of time that the Fund holds its assets. Interest
income from direct investment by noncorporate taxpayers in U.S. Government
obligations (but not repurchase agreements) generally is not subject to state
taxation. However, some states may tax mutual fund dividends attributable to
such income. The Transfer Agent will send a notice to each shareholder (Form
1099 or 1099 substitute) advising the shareholder of any taxable income or
capital gains distributed by the Fund for each taxable year.

A sale of Fund shares is a taxable event that may result in
a capital gain or loss. To the extent that Redemption Requests result in sales
of shares of the Fund's portfolio securities, remaining shareholders may be
subject to capital gains or losses.

For a more detailed discussion of the federal income tax
consequences of investing in shares of the Fund, see "Taxation" in the SAI.
Before investing in this Fund, you should consult your tax adviser regarding the
consequences of your local and state tax laws.

PERFORMANCE COMPARISONS

Advertisements and other sales literature may refer to the
Fund's total return. The total return for the one-, five- and 10-year periods
(or for the life of the Fund until the Fund is in existence for such longer
periods) through the most recent calendar quarter represents the average annual
compounded rate of return on an investment of $1,000 in the Fund at the public
offering price, plus any applicable sales load. Total return may also be
presented for other periods.

All data are based on past investment results and do not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, portfolio composition, and Fund
operating expenses. Investment performance also often reflects the risks
associated with the Fund's investment objective and policies. These factors
should be considered when comparing the Fund's investment results with those of
other mutual funds and other investment vehicles. Fund performance may be
compared with that of various indexes.

For additional information regarding comparative
performance information and the calculation of total return, see "Performance
Comparisons" in the SAI.

<PAGE>

COUNSEL AND INDEPENDENT AUDITORS

Legal matters in connection with the issuance of shares of
common stock of the Fund are passed upon by Satterlee Stephens Burke & Burke
LLP, 230 Park Avenue, New York, NY 10169. Mendlowitz Weitsen, LLP, 646 Highway
18, East Brunswick, NJ 08816 have been selected as independent accountants for
the Fund.

<PAGE>

INVESTMENT ADVISER
Moneypaper Advisor, Inc.

Administrator,
Transfer Agent, and
SHAREHOLDER SERVICING AGENT
American Data Services, Inc.

DISTRIBUTOR
ADS Distributors, Inc.

CUSTODIAN
Firstar Corp.

INDEPENDENT ACCOUNTANTS
Mendlowitz Weitsen, LLP

LEGAL COUNSEL
Satterlee Stephens Burke & Burke LLP

THE MP63 FUND

PROSPECTUS

TABLE OF CONTENTS

Risk/return Summary...........................2

Investment Objective and Policies.............4

Management....................................7

How to Purchase Shares........................9

How to Redeem Shares.........................11

Shareholder Services.........................13

Dividends and Distributions..................14

Valuation of Shares..........................14

Tax Status...................................15

Performance Comparisons......................15

Counsel and Independent Auditors.............16

A Statement of Additional Information ("SAI") containing additional
information about the Fund, dated December 1, 1999, is available free of charge.
Additional information about the Fund's investments is available in the Fund's
Semi-Annual Report to Shareholders. An SAI and/or the Semi-Annual Report will be
sent to any investor within three (3) business days of the Fund's receipt of a
request for one. The address of the Fund is The Hauppauge Corporate Center, 150
Motor Parkway, Suite 109W, Hauppauge, NY 11788 and its telephone number for
shareholder inquiries and to request copies of the SAI or the Fund's Semi-Annual
Report is 1-877-MP63FUN (676-3386). Furthermore, information about the Fund,
including the SAI can be reviewed and copied at the Commission's Public
Reference Room in Washington, D.C. and information on the operation of the
Commission's Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. Reports and other information about the Fund are also available
on the EDGAR database or on the Commission's Internet site at HTTP://WWW.SEC.GOV
Copies of this information may be obtained, upon payment of a duplicating fee by
electronic request at the following e-mail address: [email protected] or by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-0102. The SAI has been filed with the Securities and Exchange Commission
and is incorporated in its entirety by reference in this Prospectus.

(INVESTMENT COMPANY ACT FILE NO. 811-09053)

MP 63 FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION

MARCH 6, 2000

Table of Contents
PAGE

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS.............................1

DIRECTORS AND EXECUTIVE OFFICERS............................................3

INVESTMENT ADVISORY AND OTHER SERVICES......................................4

PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE..........................6

TAXATION....................................................................7

OWNERSHIP OF SHARES.........................................................8

DIVIDENDS AND DISTRIBUTIONS.................................................8

NET ASSET VALUE.............................................................8

PERFORMANCE COMPARISONS.....................................................9

COUNSEL AND INDEPENDENT ACCOUNTANTS........................................10

OTHER INFORMATION..........................................................11

FINANCIAL STATEMENTS.......................................................11

This Statement of Additional Information is not a
prospectus, but should be read in conjunction with the Fund's Prospectus dated
March 6, 2000. A copy of the Prospectus may be obtained from the Fund c/o
American Data Services, Inc. at The Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, New York 11788 or telephone 1-877-MP63FUND (676-3386).

<PAGE>

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS

The Fund is an open-end, diversified management investment
company which was incorporated under the laws of the state of Maryland on
October 13, 1998. The Fund's business and affairs are managed by its officers
under the direction of its Board of Directors. The Fund currently offers its
shares in one series, which is being offered for sale. The Fund's investment
objective and a summary of its investment policies are set forth in the
Prospectus. Additional information regarding the Fund's investment policies and
restrictions is set forth below.

INVESTMENT POLICIES. The following paragraphs provide
additional information about the Fund's investment policies. Unless otherwise
noted, the policies described in this Statement of Additional Information are
not fundamental and may be changed by the Board of Directors.

REPURCHASE AGREEMENTS. In addition to common stock, the
Fund may invest in repurchase agreements collateralized by the securities in
which it may invest. A repurchase agreement involves the purchase by the Fund of
the securities with the condition that after a stated period of time the
original seller will buy back the same securities at a predetermined price or
yield. The Fund's custodian will hold the securities underlying any repurchase
agreement or such securities will be part of the Federal Reserve Book Entry
System. The market value of the collateral underlying the repurchase agreement
will be determined on each business day. If at any time the market value of the
Fund's collateral falls below the repurchase price of the repurchase agreement
(including any accrued interest), the Fund will promptly receive additional
collateral (so the total collateral is an amount at least equal to the
repurchase price plus accrued interest). Repurchase agreements involve certain
risks not associated with direct investments in securities. In the event the
original seller defaults on its obligation to repurchase, the Fund will seek to
sell the collateral, which could involve costs of delays. To the extent that
proceeds from the sale of collateral are less than the repurchase price, the
Fund would suffer a loss.

SECURITIES LOANS. Although not currently the intention of
the Fund to do so, the Fund reserves the right to make secured loans of its
portfolio securities, on either a short-term or long-term basis, amounting to
not more than 25% of its total assets, thereby realizing additional income. The
risks in lending portfolio securities as with other extensions of credit,
consist of possible delay in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. As a matter of
policy, securities loans are made to broker-dealers pursuant to agreements
requiring that the loans be continuously secured by collateral consisting of
cash or short-term debt obligations at least equal at all times to the value of
the securities on loan, "marked-to-market" daily. The borrower pays to the Fund
an amount equal to any dividends or interest received on securities lent. The
Fund retains all or a portion of the interest received on investment of the cash
collateral or receives a fee from the borrower. Although voting rights, or
rights to consent, with respect to the loaned securities may pass to the
borrower, the Fund retains the right to call the loans at any time on reasonable
notice, and it will do so to enable the Fund to exercise voting rights on any
matters materially affecting the investment. The Fund may also call such loans
in order to sell the securities.

INVESTMENT RESTRICTIONS

In addition to the investment objective and policies set
forth in the Prospectus and in this Statement of Additional Information, the
Fund is subject to certain fundamental and non-fundamental investment
restrictions, as set forth below. Fundamental investment restrictions may not be
changed with respect to the Fund, without the vote of a majority of the Fund's
outstanding shares. Non-fundamental investment restrictions of the Fund may be
changed by the Board of Directors.

As fundamental investment restrictions, the Fund will not:

1. Invest 25% or more of the value of its total assets in
the securities of issuers conducting their principal business activities in any
one industry. This restriction also does not apply to securities of the U.S.
Government or its agencies and instrumentalities and repurchase agreements
relating thereto.

2. Purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities), if, as a result, as to 75% of the Fund's total assets, more
than 5% of its net assets would be invested in the securities of one issuer or
the Fund would hold more than 10% of the outstanding voting securities of any
one issuer.

<PAGE>

3. Issue any senior securities, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), other than as set
forth in restriction number 4 below.

4. Borrow amounts in excess of 10% of the cost or 5% of the
market value of its total assets, whichever is less, and then only from a bank
and as a temporary measure for extraordinary or emergency purposes in order to
meet redemption requests. The reason the Fund might borrow would be to avoid
selling a portion of its investments at a time when it may be disadvantageous to
do so. Interest paid by the Fund on borrowed funds would decrease its net
earnings. To secure any such borrowing, the Fund may pledge or hypothecate not
in excess of 15% of the value of its total assets.

5. Purchase or sell real estate, commodities or commodity
futures contracts.

6. Act as an underwriter of securities of other issuers,
except insofar as the Fund may be technically deemed an underwriter under the
federal securities laws in connection with the disposition of portfolio
securities.

7. Engage in any short-selling operations.

8. Lend money other than through the purchase of debt
securities in accordance with its investment policies.

9. Engage in margin transactions or in transactions
involving puts, calls, straddles, or spreads, except as permitted by the Fund
under its investment policies.

10. Acquire or retain more than 5% of the securities of any
other investment company.

The Fund is also subject to the following restrictions that
are not fundamental and may therefore be changed by the Board of Directors
without shareholder approval.

The Fund will not:

1. Acquire securities for the purpose of exercising control
over management.

2. Invest more than 15% of its net assets in illiquid
securities.

Unless otherwise indicated, percentage limitations included
in the restrictions apply at the time the Fund enters into a transaction.
Accordingly, any later increase or decrease beyond the specified limitation
resulting from a change in the Fund's net assets will not be considered in
determining whether it has complied with its investment restrictions.

<PAGE>

DIRECTORS AND EXECUTIVE OFFICERS

The following table contains information concerning the
directors and officers of the Fund and their principal occupations during the
past five years. Directors who are interested persons, as defined by the 1940
Act, are indicated by asterisk.
<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------------------------------

POSITIONS HELD PRINCIPAL OCCUPATION
WITH THE FUND LAST FIVE YEARS
NAME AND ADDRESS
- --------------------------------------------------------------------------------------------------------

<S> <C> <C>
Ted S. Gladstone - Age 56 Director President, Gladstone Development
183 Round Hill Road Corporation.
Greenwich, Connecticut 06831

- --------------------------------------------------------------------------------------------------------

Gloria L. Schaffer - Age 68 Director Retired since 1996; Prior thereto from
51 Tumblebrook Road 1991-1995, Commissioner of Consumer
Woodbridge, Connecticut 06525 Protection for the State of Connecticut
- --------------------------------------------------------------------------------------------------------

Harold G. Weinreb - Age 62 Director Consultant since 1987; Prior thereto from
112 Brite Avenue 1966 to 1987, employed by W.R. Grace &
Scarsdale, New York 10583 Co., most recently as Director, Corporate
Engineering from 1977-1987.
- --------------------------------------------------------------------------------------------------------

*Vita Nelson - Age 60 Chairman of the Board of Chief Executive Officer of the
l0l0 Mamaroneck Avenue Directors, Chief Executive Moneypaper, Inc.
Mamaroneck, New York 10543 Officer and Director
- --------------------------------------------------------------------------------------------------------

*Michael Miola - Age 46 Director Chief Executive Officer of American Data
The Hauppauge Corporate Center Services, Inc.
150 Motor Parkway
Hauppauge, New York 11788
- ---------------------------------------------------------------- ---------------------------------------
</TABLE>

The executive officers of the Fund are Vita Nelson,
President, Rod Drysdale, Treasurer, Michael Miola, Assistant Treasurer and
Lester Nelson, Secretary. Mr. Drysdale is the Chief Financial Officer of Temper
of the Times Communications, Inc., a registered broker-dealer, an affiliate of
the Adviser. From 1989 through 1998, Citibank, N.A., employed Mr. Drysdale in
both its retail banking and brokerage services division. He earned a BS in
Finance from the University of Vermont in 1989. Mr. Nelson is a partner in the
law firm of Nelson & Nelson, 60 East 42nd Street, New York, NY and is the spouse
of Vita Nelson.

The members of the Audit Committee of the Board of
Directors are Ted S. Gladstone, Gloria Schaffer and Harold Weinreb. Ms. Schaffer
acts as the chairperson of such committee. The Audit Committee oversees the
Fund's financial reporting process, reviews audit results and recommends
annually to the Fund a firm of independent certified public accountants.

Those Directors who are officers or employees of the
Adviser, the Administrator or their affiliates receive no remuneration from the
Fund. Each disinterested Director receives a fee from the Fund for each regular
quarterly and in-person special meeting of the Board of Directors attended. Each
Member of the Board who is not affiliated with the Adviser or the Administrator
receives $1,000 per year for serving as a director of the Fund and $250 for each
meeting attended. In addition, each Director who is not affiliated with the
Adviser or the Administrator is reimbursed for expenses incurred in connection
with attending meetings.

<PAGE>

The following table sets forth the compensation received by
each director from the Fund during the fiscal year ended February 29, 2000.

================================================================================

DIRECTOR AGGREGATE COMPENSATION FROM THE FUND
- --------------------------------------------------------------------------------

Ted S. Gladstone $1,750
- --------------------------------------------------------------------------------

Gloria Schaffer $1,500
- --------------------------------------------------------------------------------

Harold Weinreb $2,000
- --------------------------------------------------------------------------------

Vita Nelson $0
- --------------------------------------------------------------------------------

Michael Miola $0
================================================================================

INVESTMENT ADVISORY AND OTHER SERVICES

The investment adviser for the Fund is The Moneypaper
Advisor, Inc. (the "Adviser"). The Adviser will act as such pursuant to a
written agreement which, after its initial two-year period, must be annually
re-approved by the Board of Directors. The address of the Adviser is 1010
Mamaroneck Avenue, Mamaroneck, New York 10543.

CONTROL OF THE ADVISER

The stock of the Adviser is owned by The Moneypaper, Inc.,
of which Vita Nelson is the majority shareholder.

INVESTMENT ADVISORY AGREEMENT

The Adviser acts as the investment adviser of the Fund
under an Investment Advisory Agreement which has been approved by the Board of
Directors (including a majority of the Directors who are not parties to the
agreement, or interested persons of any such party).

The Investment Advisory Agreement will terminate
automatically in the event of its assignment. In addition, the agreement is
terminable at any time, without penalty, by the Board of Directors or by vote of
a majority of the Fund's outstanding voting securities on not more than sixty
(60) days' written notice to the Adviser, and by the Adviser on sixty (60) days'
written notice to the Fund. Unless sooner terminated, the agreement shall
continue in effect for more than two years after its execution only if such
continuance is specifically approved at least annually by either the Board of
Directors or by a vote of a majority of the outstanding shares of the Fund,
provided that in either event such continuance is also approved by a vote of a
majority of the Directors who are not parties to such agreement, or interested
persons of such parties, cast in person at a meeting called for the purpose of
voting on such approval.

Pursuant to its Investment Advisory Agreement, the Fund
will pay the Adviser monthly an advisory fee equal, on an annual basis, to 0.35%
of its average daily net assets. The Adviser may waive a portion of its fees
from time to time.

Under the Investment Advisory Agreement, the Adviser
provides the Fund with advice and assistance in the selection and disposition of
the Fund's investments. All investment decisions are subject to review by the
Fund's Board of Directors to ensure that they meet the criteria described in the
prospectus. The Adviser is obligated to pay the salaries and fees of any
affiliates of the Adviser serving as officers of the Fund.

ADMINISTRATOR

The Administrator for the Fund is American Data Services,
Inc. (the "Administrator"), which has its principal office at The Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily
in the business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York, Denver and Bermuda.

<PAGE>

Pursuant to an Administrative Service Agreement with the
Fund, the Administrator provides all administrative services necessary for the
Fund, subject to the supervision of the Board of Directors. The Administrator
will provide persons to serve as officers of the Fund. Such officers may be
directors, officers or employees of the Administrator or its affiliates.

The Administrative Service Agreement is terminable by the
Board of Directors of the Fund or the Administrator on sixty (60) days' written
notice and may be assigned provided the non-assigning party provides prior
written consent. The Agreement shall remain in effect for two years from the
date of its initial approval, and subject to annual approval of the Board of
Directors for one-year periods thereafter. The Agreement provides that in the
absence of willful misfeasance, bad faith or negligence on the part of the
Administrator or reckless disregard of its obligations thereunder, the
Administrator shall not be liable for any action or failure to act in accordance
with its duties thereunder.

Under the Administrative Service Agreement, the
Administrator provides all administrative services, including, without
limitation: (i) provides entry of all data from shareholders' applications; (ii)
provides services of persons competent to perform such administrative and
clerical functions as are necessary to provide effective administration of the
Fund; (iii) overseeing the performance of administrative and professional
services to the Fund by others, including the Fund's Custodian; (iv) preparing,
but not paying for, the periodic updating of the Fund's Registration Statement,
Prospectus and Statement of Additional Information in conjunction with Fund
counsel, including the printing of such documents for the purpose of filings
with the Securities and Exchange Commission and state securities administrators,
preparing the Fund's tax returns, and preparing reports to the Fund's
shareholders and the Securities and Exchange Commission; (v) preparing in
conjunction with Fund counsel, but not paying for, all filings under the
securities or "Blue Sky" laws of such states or countries as are designated by
the Distributor, which may be required to register or qualify, or continue the
registration or qualification, of the Fund and/or its shares under such laws;
(vi) preparing notices and agendas for meetings of the Board of Directors and
minutes of such meetings in all matters required by the 1940 Act to be acted
upon by the Board; and (vii) monitoring daily and periodic compliance with
respect to all requirements and restrictions of the Investment Company Act, the
Internal Revenue Code and the Prospectus.

The Administrator also provides the Fund with all
accounting services, including, without limitation: (i) daily computation of net
asset value; (ii) maintenance of security ledgers and books and records as
required by the Investment Company Act; (iii) production of the Fund's listing
of portfolio securities and general ledger reports; (iv) reconciliation of
accounting records; (v) calculation of yield and total return for the Fund; (vi)
maintaining certain books and records described in Rule 31a-1 under the 1940
Act, and reconciling account information and balances among the Fund's Custodian
and Adviser; and (vii) monitoring and evaluating daily income and expense
accruals, and sales and redemptions of shares of the Fund.

ADMINISTRATOR'S FEES

For the administrative, fund accounting, transfer agent and
disbursing agent services rendered to the Fund by the Administrator, the Fund
pays the Administrator a monthly fee based on the Fund's average net assets. The
Fund also pays the Administrator for out-of-pocket expenses for printing,
postage and telephone costs.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT

Firstar Corp. serves as custodian for the Fund's cash and
securities. Pursuant to a Custodian Agreement, it is responsible for maintaining
the books and records of the Fund's portfolio securities and cash. The Custodian
does not assist in, and is not responsible for, investment decisions involving
assets of the Fund. The Administrator acts as the Fund's transfer agent and
dividend disbursing agent.

<PAGE>

DISTRIBUTION AGREEMENT

Pursuant to a Distribution Agreement, ADS Distributors,
Inc. (the "Distributor") has agreed to act as the principal underwriter for the
Fund in the sale and distribution to the public of shares of the Fund, either
through dealers or otherwise. The Distributor has agreed to offer such shares
for sale at all times when such shares are available for sale and may lawfully
be offered for sale and sold.

OTHER EXPENSES

Fees paid to the Adviser and the Administrator are deducted
from income of the Fund before dividends are paid. In addition, the Fund pays
expenses including, but not limited to, the expenses of reports to shareholders,
shareholders' meetings and proxy solicitations, fees and expenses of officers
and Directors who are not affiliated with the Adviser, the Administrator or any
of their respective affiliates, taxes, interest, legal fees, custodian fees,
audit fees, brokerage fees and commissions, fees and expenses of registering and
qualifying the Fund and its shares for distribution under federal and state
securities laws.

PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE

The Fund's assets are invested by the Adviser in a manner
consistent with its investment objectives, policies, and restrictions and with
any instructions the Board of Directors may issue from time to time. Within this
framework, the Adviser is responsible for making all determinations as to the
purchase and sale of portfolio securities and for taking all steps necessary to
implement securities transactions on behalf of the Fund.

U.S. Government securities generally are traded in the
over-the-counter market through broker-dealers. A broker-dealer is a securities
firm or bank that makes a market for securities by offering to buy at one price
and sell at a slightly higher price. The difference between the prices is known
as a spread.

In placing orders for the purchase and sale of portfolio
securities for the Fund, the Adviser will use its best efforts to obtain the
best possible price and execution and will otherwise place orders with
broker-dealers subject to and in accordance with any instructions the Board of
Directors may issue from time to time. The Adviser will select broker-dealers,
including Temper of the Times Communications, Inc., its affiliates, to execute
portfolio transactions on behalf of the Fund primarily on the basis of best
price and execution.

Transactions on U.S. stock exchanges and other agency
transactions involve the payment by the Fund of negotiated brokerage
commissions. Such commissions vary among different brokers. A particular broker
may charge different commissions according to such factors as the difficulty and
size of the transaction.

It has for many years been a common practice in the
investment advisory business for advisers of investment companies and other
institutional investors to receive brokerage and research services (as defined
in the Securities Exchange Act of 1934, as amended (the "1934 Act")) from
broker-dealers that execute portfolio transactions for the clients of such
advisers and from third parties with which such broker-dealers have
arrangements. These services include such matters as general economic and market
reviews, industry and company reviews, evaluations of investments,
recommendations as to the purchase and sale of investments, newspapers,
magazines, pricing services, quotation services, news services and personal
computers utilized by the Adviser. Where the services referred to above are not
used exclusively by the Adviser for research purposes, the Adviser, based upon
its own allocations of expected use, bears that portion of the cost of these
services which directly relates to their non-research use. It is the position of
the staff of the Securities and Exchange Commission that Section 28(e) does not
apply to the payment of such greater commissions in "principal" transactions.

As permitted by Section 28(e) of the 1934 Act, the Adviser
may cause the Fund to pay a broker-dealer which provides "brokerage and research
services" (as defined in the 1934 Act) to the Adviser an amount of disclosed
commission for effecting securities transactions on stock exchanges and other
transactions for the Fund on an agency basis in excess of the commission which
another broker-dealer would have charged for effecting that transaction. The
Adviser's authority to cause the Fund to pay any such greater commissions is
also subject to such policies as the Directors may adopt from time to time.
Nevertheless, the Adviser does not currently intend to cause the Fund to make
such payments. Accordingly, the Adviser will use its best efforts to obtain the
most favorable price and execution available with respect to all of the Fund's
transactions, as described above.

<PAGE>

Consistent with the Conduct Rules of the National
Association of Securities Dealers, Inc. and subject to seeking the most
favorable price and execution available and such other policies as the Directors
may determine, the Adviser may consider sales of shares of the Fund as a factor
in the selection of broker-dealers to execute portfolio transactions for the
Fund.

TAXATION

The Fund is treated as a corporation for federal income tax
purposes under the Internal Revenue Code of 1986, as amended (the "Code"). The
Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Code. By so qualifying, the Fund will not incur federal
income or state taxes on its net investment income and on net realized capital
gains to the extent distributed as dividends to shareholders.

Amounts not distributed on a timely basis in accordance
with a calendar year distribution requirement are subject to a nondeductible 4%
excise tax at the Fund level. To avoid the tax, the Fund must distribute during
each calendar year an amount equal to the sum of (a) at least 98% of its
ordinary income (not taking into account any capital gains or losses) for the
calendar year, (b) at least 98% of its capital gains in excess of capital losses
(adjusted for certain ordinary losses) for a one-year period generally ending on
October 31st of the calendar year, and (c) all ordinary income and capital gains
for previous years that were not distributed during such years.

Under the Code, dividends derived from interest, and any
short-term capital gains, are taxable to shareholders as ordinary income for
federal and state tax purposes, regardless of whether such dividends are taken
in cash or reinvested in additional shares. Distributions made from the Fund's
net realized long-term capital gains (if any) and designated as capital gain
dividends are taxable to shareholders as long-term capital gains, regardless of
the length of time Fund shares are held. Corporate investors are not eligible
for the dividends-received deduction with respect to distributions derived from
interest on short-or long-term capital gains from the Fund but may be entitled
to such a deduction in respect to distributions attributable to dividends
received by the Fund. A distribution will be treated as paid on December 31st of
a calendar year if it is declared by the Fund in October, November or December
of the year with a record date in such a month and paid by the Fund during
January of the following year. Such distributions will be taxable to
shareholders in the calendar year the distributions are declared, rather than
the calendar year in which the distributions are received.

Distributions paid by the Fund from net long-term capital
gains (excess of long-term capital gains over long-term capital losses), if any,
whether received in cash or reinvested in additional shares, are taxable as
long-term capital gains, regardless of the length of time you have owned shares
in the Fund. Distributions paid by the Fund from net short-term capital gains
(excess of short-term capital gains over short-term capital losses), if any,
whether received in cash or reinvested in additional shares are taxable as
ordinary income. Capital gains distributions are made when the Fund realizes net
capital gains on sales of portfolio securities during the year. Realized capital
gains are not expected to be a significant or predictable part of the Fund's
investment return.

A sale of the Fund's shares is a taxable event and may
result in a capital gain or loss. A capital gain or loss may be realized from an
ordinary redemption of shares, a checkwriting redemption, or an exchange of
shares between two mutual funds (or two portfolios of a mutual fund).

Dividend distributions, capital gains distributions, and
capital gains or losses from redemptions and exchanges may be subject to state
and local taxes.

Ordinarily, distributions and redemption proceeds earned by
the Fund shareholder are not subject to withholding of federal income tax.
However, 31% of the Fund's distributions and redemption proceeds must be
withheld if the Fund shareholder fails to supply the Fund or its agent with such
shareholder's taxpayer identification number or if the Fund shareholder who is
otherwise exempt from withholding fails to properly document such shareholder's
status as an exempt recipient.

<PAGE>

The information above is only a summary of some of the tax
considerations generally affecting the Fund and its shareholders. No attempt has
been made to discuss individual tax consequences. To determine whether the Fund
is a suitable investment based on his or her tax situation, a prospective
investor may wish to consult a tax advisor.

OWNERSHIP OF SHARES

All shares of the Fund, when issued, will be fully paid and
nonassessable and will be redeemable. They can be issued as full or fractional
shares. A fractional share has, pro rata, the same rights and privileges as a
full share. The shares possess no preemptive or conversion rights. The shares of
the Fund will share ratably in the dividends of the Fund, if any, as may be
declared by the Board of Directors, and in the distribution of any net assets
upon liquidation of the Fund, after the payment of all debts and liabilities of
the Fund.

Each share of the Fund has one vote (with proportionate
voting for fractional shares) regardless of the relative net asset values of the
Fund's shares. If pursuant to the Fund's Bylaws, the holders of shares
representing at least 10% of the Fund's total outstanding shares request that
the Fund hold a special meeting of shareholders it will do so. Unless required
under the Investment Company Act, the Fund will not necessarily hold annual
meetings of shareholders. As a result, shareholders may not vote each year on
the election of members of the Board of Directors or the appointment of
auditors. The Fund will assist in the communication with other shareholders. In
addition, the Investment Company Act requires a shareholder vote for all
amendments to the Fund's fundamental investment objective and policies and
investment restrictions and for any amendments to investment advisory contracts.

The Fund may hold informal informational meetings of
shareholders to discuss the Fund's and the Adviser's current investment
philosophy and to address any concerns that shareholders may have. Shareholders
will receive advance notice of the date, time and location of such meetings.
However, no official business may be conducted at such meetings.

On December 28, 1998, the Moneypaper, Inc. invested
$100,000 in shares of the Fund at $10.00 per share, as seed capital.

DIVIDENDS AND DISTRIBUTIONS

Net investment income, if any, is declared as dividends and
paid annually. Substantially all the realized net capital gains for the Fund, if
any, are also declared and paid on an annual basis. Dividends are payable to
shareholders of record at the time of declaration.

Dividends are automatically reinvested in additional Fund
shares unless the shareholder has elected to have them paid in cash.

The net investment income of the Fund for each business day
is determined immediately prior to the determination of net asset value. Net
investment income for other days are determined at the time net asset value is
determined on the prior business day. See "Purchase of Shares" and "Redemption
of Shares" in the Prospectus.

NET ASSET

The method for determining the Fund's net asset value is
summarized in the Prospectus in the text following the heading "Valuation of
Shares." The net asset value of the Fund's shares is determined on each day on
which the New York Stock Exchange is open. The New York Stock Exchange is not
open for business on the following holidays (or on the nearest Monday or Friday
if the holiday falls on a weekend): New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.

<PAGE>

PERFORMANCE COMPARISONS

Total return quoted in advertising and sales literature
reflects all aspects of the Fund's return, including the effect of reinvesting
dividends and capital gain distributions and any change in the Fund's net asset
value during the period.

The Fund's total return must be displayed in any
advertisement containing the Fund's yield. Total return is the average annual
total return for the 1-, 5- and 10-year period ended on the date of the most
recent balance sheet included in the Statement of Additional Information,
computed by finding the average annual compounded rates of return over 1-, 5-
and 10-year periods that would equate the initial amount invested to the ending
redeemable value according to the following formula:

P(1 + T)n = ERV

Where:

P = a hypothetical initial investment of $1000

T = average annual total return

n = number of years

ERV = ending redeemable value of a
hypothetical $1000 payment made at the
beginning of the 1-, 5- or 10-year
periods at the end of the 1-, 5-or
10-year periods (or fractions
thereof).

Because the Fund has not had a registration in effect for
1, 5 or 10 years, no Performance Comparisons utilizing the above formula are
available.

Average annual total return is calculated by determining
the growth or decline in value of a hypothetical historical investment in the
Fund over a stated period and then calculating the annual compounded percentage
rate that would have produced the same result if the rate of growth or decline
in value had been constant throughout the period. For example, a cumulative
total return of 100% over 10 years would produce an average annual total return
of 7.18%, which is the steady annual rate that would result in 100% growth on a
compounded basis in 10 years. While average annual total returns are a
convenient means of comparing investment alternatives, investors should realize
that the Fund's performance is not constant over time, but changes from year to
year, and that average annual total returns represent average figures as opposed
to actual year-to-year performance.

In addition to average annual total returns, the Fund may
quote unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount and may be
calculated for a single investment, a series of investments, or a series of
redemptions over any time period. Performance information may be quoted
numerically or in a table, graph, or similar illustration.

The Fund's performance may be compared with the performance
of other funds with comparable investment objectives, tracked by fund rating
services or with other indexes of market performance. Sources of economic data
that may be considered in making such comparisons may include, but are not
limited to, rankings of any mutual fund or mutual fund category tracked by
Lipper Analytical Services, Inc. or Morningstar, Inc.; data provided by the
Investment Company Institute; major indexes of stock market performance; and
indexes and historical data supplied by major securities brokerage or investment
advisory firms. The Fund may also utilize reprints from newspapers and magazines
furnished by third parties to illustrate historical performance.

The agencies listed below measure performance based on
their own criteria rather than on the standardized performance measures
described in the preceding section.

Lipper Analytical Services, Inc. distributes mutual fund
rankings monthly. The rankings are based on total return
performance calculated by Lipper, generally reflecting
changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a
variety of performance periods, including year-to-date,
1-year, 5-year, and 10-year performance. Lipper classifies
mutual funds by investment objective and asset category.

<PAGE>

Morningstar, Inc. distributes mutual fund ratings twice a
month. The ratings are divided into five groups: highest,
above average, neutral, below average and lowest. They
represent the fund's historical risk/reward ratio relative
to other funds in its broad investment class as determined
by Morningstar, Inc. Morningstar ratings cover a variety of
performance periods, including 1-year, 3-year, 5-year,
10-year and overall performance. The performance factor for
the overall rating is a weighted-average assessment of the
fund's 1-year, 3-year, 5-year, and 10-year total return
performance (if available) reflecting deduction of expenses
and sales charges. Performance is adjusted using
quantitative techniques to reflect the risk profile of the
fund. The ratings are derived from a purely quantitative
system that does not utilize the subjective criteria
customarily employed by rating agencies such as Standard &
Poor's and Moody's Investor Service, Inc.

CDA/Weisenberger's Management Results publishes mutual fund
rankings and is distributed monthly. The rankings are based
entirely on total return calculated by Weisenberger for
periods such as year-to-date, 1-year, 3-year, 5-year and
10-year. Mutual funds are ranked in general categories
(e.g., international bond, international equity, municipal
bond, and maximum capital gain). Weisenberger rankings do
not reflect deduction of sales charges or fees.

Independent publications may also evaluate the Fund's
performance. The Fund may from time to time refer to results published in
various periodicals, including Barrons, Financial World, Forbes, Fortune,
Investor's Business Daily, Kiplinger's Personal Finance Magazine, Money, U.S.
News and World Report and The Wall Street Journal.

Independent, unmanaged indexes, such as those listed below,
may be used to present a comparative benchmark of the Fund's performance. The
performance figures of an index reflect changes in market prices, reinvestment
of all dividend and interest payments and, where applicable, deduction of
foreign withholding taxes, and do not take into account brokerage commissions or
other costs. Because the Fund is a managed portfolio, the securities it owns
will not match those in an index. Securities in an index may change from time to
time.

The Dow Jones Industrial Average is an index of 30 common
stocks frequently used as a general measure of stock market
performance.

Standard & Poor's 500 Composite Stock Price Index is an
index of common stocks frequently used as a general measure
of stock market performance.

COUNSEL AND INDEPENDENT ACCOUNTANTS

Legal matters in connection with the issuance of shares of
common stock of the Fund are passed upon by Satterlee Stephens Burke & Burke
LLP, 230 Park Avenue, New York, NY 10169. Mendlowitz Weitsen, LLP, 646 Highway
18, Brunswick, NJ 08816 have been selected as independent accountants for the
Fund.

OTHER INFORMATION

The Adviser has been registered with the Securities
Exchange Commission (SEC) under the Investment Advisers Act of 1940 since
December 1998. The Fund has filed a registration statement under the Securities
Act of 1933 and the 1940 Act with respect to the shares offered. Such
registrations do not imply approval or supervision of the Fund or the Adviser by
the SEC.

<PAGE>

For further information, please refer to the registration
statement and exhibits on file with the SEC in Washington, D.C. These documents
are available upon payment of a reproduction fee. Statements in the Prospectus
and in this Statement of Additional Information concerning the contents of
contracts or other documents, copies of which are filed as exhibits to the
registration statement, are qualified by reference to such contracts or
documents.

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 28, 1998

-----------------------------------------------------

ASSETS

Cash .................................................$100,000

LIABILITIES .......................................... --
--------

NET ASSETS ..........................................$100,000
========

Net assets applicable to 10,000 shares of
common stock par value $.001 each;
1,000,000,000 shares authorized ................$100,000
========

Net asset value, and offering price per share ........$ 10.00
========

Redemption price per share (Note 4)

See Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENT-

-------------------------------------------------------------------

NOTE 1. MP 63 Fund, Inc. ("the Fund") was incorporated under
the laws of the State of Maryland on October 13, 1998.
The Fund is registered with the Securities and
Exchange Commission as an open-end diversified
management investment company and has had no
operations to date other than these relating to
organizational matters and the sale and issuance of
10,000 shares of its common stock to The Moneypaper,
Inc.

NOTE 2. The Investment Advisory agreement, the Administrative
Service agreement and the distribution agreement are
described elsewhere in the Prospectus and Statement of
Additional Information.

NOTE 3. Organizational expenses are being paid by the Funds
Investment Adviser.

NOTE 4. There is a redemption fee payable to the Fund equal to
2.00% for shares that are held for less than three
years and 1.00% for shares that are held for more than
three but less than five years.